Shares of Peru’s largest mining company are up 5.4% today after it reported fourth quarter results.

Compania de Minas Buenaventura (BVN) said strong gold production at the Yanacocha mine helped results reach the high end of annual guidance. Fourth quarter adjusted Ebitda, including associated companies, was $166.9 million, Buenaventura reported in a press release (link is a PDF). The company produced 245,000 gold ounces and 5.5 million silver ounces in the fourth quarter, compared to 184,000 gold ounces and 4.8 million in the same quarter in 2013.

Bloomberg News

One kilogram gold and silver bars.

But for the full year, production of 846,000 gold ounces fell below year-ago results of 895,000 gold ounces. Silver production was up: 19.7 million silver ounces versus 18.9 million silver ounces in 2013).

Weaker-than-expected fourth quarter results for the world’s largest bread maker, Grupo Bimbo, resulted from restructuring charges, pension fund provisions and taxes that were higher than expected.

Shares of Mexico’s Grupo Bimbo (GRBMF) are down 4.3% in midday trading. After the market closed Thursday, Bimbo reported group Ebitda of pesos 5.3 billion ($334.6 million), which was 12% below the consensus among analysts, but up 6.6% year over year, Citi Research reports, including Canada Bread, which it acquired last year. Overall sales increased 11%, in line with expectations.

Getty Images

At the U.S.-Mexico border.

But Grupo Bimbo has been very acquisitive, and earnings in Mexico, Latin America and Europe were above Citi estimates. Citi adds that restructuring charges should decline this year. And while non-cash incremental pension fund provisions (MEPPs) may pose a risk to net income. Analysts Alexander Robarts and Sergio Matsumoto at Citi raised their price target on the stock, to pesos 48, from pesos 45. They also raised their earnings estimates: for 2014 and 2015. They write:

“Higher than expected restructuring charges, while a negative surprise, are mostly non-recurring and resulted from a more expensive U.S. distribution route rationalization process and assets sales in other countries. Non-cash incremental pension fund provisions reflected the impact of lower U.S. interest rates on the pension liability … Our 2015 $60 million estimate in charges (down from $200 million in 2014) is unchanged and we maintain our Buy rating. Our December 17 upgrade reflected defensive attributes (41% of cash flows in hard currencies) and mid-teen Ebitda growth over next two years … A key driver at Bimbo USA remains lower year-over-year plant rationalization charges. We continue to believe high-margin Hostess sweet bread assets are an attractive M&A opportunity …”

UPDATE: Citi offered the following thoughts this afternoon after listening in on the fourth-quarter conference call: “management said operationally 4Q14 was “solid”, but that it was not satisfied with the net result. In Mexico, while some categories are growing year-to-date, they expect a clearer recovery in 2H15. The sharp peso/dollar depreciation is putting some pressure on unhedged dollar cost of goods sold. In response, Bimbo will raise prices by 1-2%. 2014 volumes were down 4%, and we expect Bimbo to get most of it back in 2015. On US restructuring charges, management stated that in 2015, they will be “less than half of those seen in 2014 … The US margin outlook is favorable this year … The ex-Hostess Wonder bread brand just completed its first full year of re-launch with Flowers Foods, which was priced in line with private label.”

The iShares MSCI Mexico Capped ETF (EWW) is flat today. Offsetting Bimbo’s peformance is Mexico’s Grupo Televisa (TV), whose stock is up 1% after it reported Ebitda for the fourth quarter that was better than expected.

“Local newspapers including Sabah and Hurriyet have reported today that the government intends to overhaul the structure of the Central Bank of the Republic of Turkey (CBRT), including amending its inflation-targeting objective to include a growth mandate, and appointing new external members into the CBRT. The news follows many months of government pressure and interference in the conduct of the CBRT, which have threatened the institution’s independence, as we and numerous market participants have observed. If true, today’s reports would appear to affirm that the likely strategy of President Recep Tayyip Erdoğan is to revamp the pillars of economic policy in Turkey to more closely align with the unorthodox economic doctrine that he and his group of advisers continue to espouse, while taking advantage of the June parliamentary elections timeline to implement personnel changes. We perceive these efforts to revamp economic policy and administration in Turkey to be potentially devastating to the country’s growth and investment prospects, and will likely expose the country to severe investor confidence shocks.

We have closed all our bullish Turkey positions. We previously recommended receiving short-dated Turkish cross-currency rates and being long short-dated Turkish government bonds on the broad rationale of disinflationary dynamics and increasing monetary policy space benefiting these positions. However, near-term political risks have overshadowed all other considerations. We can no longer recommend long positions in Turkish assets …

[Thursday], we initiated a long position in USD/TRY volatility via a 3-month call option. The trade has already generated a P&L of +0.90%. We believe that the position will continue to perform over the coming weeks …”

The iShares MSCI Turkey ETF (TUR) is down 2.2% today. The fund has fallen 4.5% this week, among the worst performances in emerging funds, save the Global X FTSE Greece 20 ETF (GREK), which is down 7.5% this week. The Vanguard FTSE Emerging Markets ETF (VWO) is up 0.4% today and this week.

Large Turkish companies that trade in the U.S are mostly lower: bank Turkiye Garanti Bankasi (TKGBY) is down 3.2%, telecom Turkcell Iletisim Hizmetleri (TKC) is down 2.4% and TAV Havalimanlari Holding (TAVHY) is down 2.3%.

President Dilma Rousseff must help right serious economic challenges in Brazil, but one challenge that she so far does not face is impeachment.

But low consumer confidence, low investor confidence, undesirable inflation, growing unemployment, water and energy rationing, a primary budget deficit and lack of economic growth all make for unhappy Brazilians. Thus, the initiation of impeachment procedures is possible, with demonstrations planned for March 15 that “will provide a signpost of the existing discontent towards the Rousseff administration, which is getting weaker by the day,” writes Mario Marconini of Teneo Intelligence.

Rousseff was board chair at Petrobras before becoming president, but has not been implicated in the growing investigation into kickbacks and corruption at the state-controlled energy giant Petroleo Brasileiro (PBR). The graft case – 18 cases in all — alleges “a scheme to funnel kickbacks from contracts to company directors, political parties and politicians … more than 150 people and 230 companies,” according to Teneo. But the stakes rise next week when prosecutors are expected to produce a list of politicians allegedly involved.

Marconini writes today that the $30 billion in losses from Petrobras bribes and overpricing is huge compared to a previous scandal that resulted in a Brazil impeachment:

“Fernando Collor de Mello, Brazil’s first president to be elected directly by popular vote after the military government (1964-1985), went through an impeachment proceeding in 1992. He was accused of involvement in a corruption scheme organized by his former campaign treasurer, who reportedly diverted $6.5 million to cover personal expenses by the president. According to now former Petrobras CEO Maria das Graças Foster, the losses with bribes and overpricing at the oil giant might reach BRL88.6 billion (nearly $30 billion) – more than 4,500 times the size of Collor de Mello’s wrongdoing.”

“Congress could accept and act upon the request of a presidential impeachment on the basis of potential violations to the constitution emanating from the Petrobras case alone (Rousseff’s use of corrupt money to finance an electoral campaign; her administrative negligence while being the chairwoman of the board). In practice, however, the chairman of the house, who receives such requests, needs to have political legitimacy to do so – and this can only exist in the presence of great popular support for it. Impeachment is a political – not judicial – process and as such requires support “from the masses.”

Petrobras shares have rallied 3.8% this morning along with a 2% jump in oil prices. But Petrobras shares are down more than 2% this week and are down nearly 11% year to date. The iShares MSCI Brazil Capped ETF (EWZ) is up 2.2% today; among the losers is meat producer BRF (BRFS), down 1.7%, while the winners include Gerdau (GGB) and Itau Unibanco (ITUB).

India’s Finance Ministry said Friday that the country’s economic growth could accelerate to between 8.1% and 8.5% in the coming fiscal year, which begins April 1.

India funds are rising in U.S. trading. The WisdomTree India Earnings Fund (EPI) is up 9% year to date and up 1.6% in recent trading. The iShares MSCI India ETF (INDA) is up 11% year to date and was up 1.3% in recent trading. The EGShares India Small Cap ETF (SCIN) is up 7.6% so far this year, and rose 2.2% in recent trading. Among stocks, Icici Bank (IBN) is up 2%; Wipro (WIT) and Infosys (INFY) are flat.

European Pressphoto Agency

India intends to attract foreign investment.

If India’s economy hits the top of the range, that would make it the world’s fastest-growing large economy as China’s expansion continues to slow, The Wall Street Journal reports. India’s market has anticipated economic growth and reforms, which should be expanded when India’s budget is revealed Saturday.

The Indian government recently revised GDP calculations, resulting in a considerable revision in GDP. Some have cast doubt on the numbers. The figures over 8% for the coming fiscal year are nicely above the 7.4% growth expected for fiscal 2014 ending March 31. See the latest Barron’s emerging markets column, “Four Winners From India’s Reform,” (subscription required.)

Ahead of the national budget on Saturday, the Indian government also announced Friday that it will spend $16 billion on the national railway system in the next fiscal year, a 52% boost from a year ago. The move could give some lagging industrial stocks a boost; among them, Sesa Sterlite (SSLT) is lower today.

The tension is mounting in Venezuela, which doesn’t bode well for the country’s bond market.

Reuters

Caracas Mayor Antonio Ledezma, an opposition leader, is under arrest.

CNN journalist Christiane Amanpour interviews the wife of Leopoldo Lopez, a Venezuelan opposition figure who has been in jail for the past year. Lopez has been “protected by the regime” in that time, according to President Nicolas Maduro. Video here.

The Washington Post published an editorial Monday saying that “with Havana’s encouragement, Mr. Maduro is trying to shore up his crumbling support by concocting supposed threats from the United States and using them to illegally imprison his leading opponents … The country with the most influence in Caracas is Cuba. U.S. officials ought to tell the Castros that they need to choose between Mr. Maduro’s anti-American-themed repression and the new relationship with Washington they say they want. ”

The U.S. and Cuba will meet in Washington Friday for a second round of diplomatic talks.

At stake: the potential lifting of the U.S. trade embargo against Cuba that has endured for a half century.

The Herzfeld Caribbean Basin Fund (CUBA), a closed-end fund that invests in companies that should benefit as Cuba resumes trade and tourism with the U.S., is up 2.3% today and more than 5% this week after clocking an 18% rise in 2014. The fund has corrected since its big jump in December when the U.S. first talked up normalization of relations with Cuba. Barron’s went down to Miami to the fund manager, producing some fascinating insights in the Feb. 21 Barron’s magazine. See “Investing In Cuba: Tom Herzfeld Sizes Up the Prospects.” Subscription required)

One tidbit: The fund started buying Seaboard (SEB), an agribusiness and shipping company, at about $200 a share; it’s now well above $3,800. Seaboard’s businesses include cargo shipping, and the sale of pork and poultry. The fund also owns materials companies including Mexico’s cement-maker Cemex (CX), as well as cruise-ship operators.

Bloomberg News

A sign: Cuban president Raul Castro, from left, former Cuban president Fidel Castro, and deceased Venezuelan president Hugo Chavez near Santiago de Cuba, Cuba.

The discussion agenda Friday includes establishment of full-fledged embassies, the movement of diplomats, visas, access to equipment and banking. But the meeting may not elicit as much fanfare as the first round of talks in January, The Wall Street Journal reports.

In an interview on state-run television, Josefina Vidal, head of the Cuban delegation, said that Cuba’s form of government is not open for debate, nor is any subject that could compromise state sovereignty. The U.S. considers Cuba a state sponsor of terror, which would prevent it from opening a full U.S. embassy with banking services. Cuba’s Washington, D.C. offices provide consular services without a bank, WSJ reports.

Prosecutors in Brazil next week are expected to name the politicians implicated in the multi-billion dollar Petrobras corruption scheme.

Shares of the state-controlled energy giant, otherwise known as Petroleo Brasileiro (PBR), are down 1.9% today. The international price of oil is down nearly 1%, and the U.S. oil-price benchmark has declined more than 3% to $49.39 per barrel. The iShares MSCI Brazil Capped ETF (EWZ) is down 0.7%.

Naming a list of politicians as allegedly benefiting from Petrobras kickbacks is a crucial phase that could send markets reeling. Eurasia Group analysts Joao Augusto de Castro Neves and Christopher Garman write that Brazil’s chief prosecutor, Rodrigo Janot, could charge major figures in the President Dilma Rousseff administration, the ruling Worker’s Party and Congress. Justice Teori Zavascki has kept the political piece of the investigation under wraps, until now. Eurasia Group writes:

“While impossible to anticipate the number of politicians involved in the case, dozens of lawmakers and cabinet members have had their names leaked in the press in recent months. This is arguably the most anticipated moment of the scandal to date, as the list has the potential to significantly redefine the political landscape of Rousseff’s second term. … Given the complexity and scope of this scandal, a piecemeal approach makes sense. Nevertheless, the first tranche of indictments possess a special symbolic value and is poised to set the tone of the crisis, as the public will likely view the individuals as the scheme’s instigators or main benefactors. … The more obvious problem for President Rousseff rests in the fact that the investigations are likely to last into 2016, with the government having little control over them. It bears repetition that the public prosecutor office is constitutionally independent from the president, and will pursue indictments based on the evidence its collects, not political considerations.”

Eurasia Group says there is only a 20% probability that Rousseff could be impeached, “though developments next week will have an important bearing on that assessment.” The analysts reiterate the four conditions necessary for impeachment:

Evidence directly linking the president to the corruption.

An irreparable schism between Rousseff and Lula.

The opposition’s evaluation that impeachment increases its odds of capturing the presidency.

Shares of Vale are tumbling lower after the Brazil mining giant reported disappointing fourth results and a 41% drop in fiscla 2014 profits.

Reuters

Vale CEO Murilo Ferreira.

Vale (VALE) is down 4.4% today, while rival Rio Tinto (RIO) is up 0.3%. BHP Billiton (BHP) is down 0.7% and Cliffs Natural Resources (CLF) is up 0.4%. Dow Jones Newswires reports:

The world’s largest iron ore producer reported a net loss in the fourth quarter as iron-ore prices fell by half, local currency weakened and impairment charges piled up. The fourth quarter loss was $1.85 billion, better than the $6.45 billion loss one year earlier. But local analysts were expecting a $740 million loss. For fiscal 2014, Vale’s Ebitda [earnings before interest, taxes, depreciation and amortization) fell 41% to $13.35 billion, the lowest figure since the 2009 global recession.

The company is cutting costs and selling assets to cover dividends and spending, especially on expansion of its Carajás iron-ore mining operation in the Brazilian Amazon. Vale wrote off almost $2 billion in fertilizer, iron-ore, coal and nickel assets during the quarter, including a $1 billion charge on Vale's fertilizer business in Brazil.

Vale's iron ore production was weak as expected, and base metals are increasingly becoming more important, Bernstein Analyst Paul Gait writes. But he thinks Vale will take on more debt, contrary to the company's goals. He has a Market Perform rating on Vale, and prefers Rio Tinto. Gait writes:

"Today’s results do not materially affect our thesis for Vale. How can we have Vale and Rio on different ratings? We appreciate that from a portfolio perspective there is little to distinguish these two companies. However, given a more conservative iron ore price forecast ... there are three factors influencing our thinking: operational gearing, depletion, and Simandou [the world's most valuable undeveloped mining asset.] … Vale is higher cost than Rio Tinto. The substantial pelletising operations, the physical distance to the Asian growth markets and the costs of the iron quadrangle operations all contribute to a valuation that, against the same iron ore price, ought to be lower than for Rio Tinto – although part of this is offset by the higher grade of Vale’s operations. Furthermore, Vale has flagged on numerous occasions the issue of depletion from its mines … [Regarding] Simandou … Rio has alleged a violation of the RICO statutes on the part of Vale and the scale of the litigation is potentially significant. Moreover, we believe that it could take many years before there is a resolution to this process. With all of these factors hanging over the stock, we revert back to the conclusion that Rio Tinto is the best place to invest for those looking for iron ore exposure.”

That was the case Wednesday, with the Turkish 1-year cross-currency rates sold off intraday by 40 basis points to 8.55% from 8.15%, while the lira sold off 1.5% against U.S. dollar, with the U.S. dollar/Turkish lira reaching a high of 2.4939, notes Société Générale Analyst Phoenix Kalen. On Tuesday, Turkey’s central bank cut the overnight lending rate by 50 basis points, from 11.25% to 10.75%, while also lowering the one-week repo rate by 25 basis points, from 7.75% to 7.50%, citing lower inflation.

Kalen writes today:

The objectivity of the Central Bank of the Republic of Turkey (CBRT) remains under attack, and its survival as an independent institution is still under question. The CBRT faces severe political pressure to reduce rates, with Tuesday’s MPC meeting producing a higher-than-expected, 50-basis-point cut in the upper overnight lending rate. However, this cut has failed to appease its critics. Yesterday, President Recep Tayyip Erdoğan and other leading politicians including Erdoğan’s senior economic adviser Yiğit Bulut accused the CBRT of colluding with foreign powers to undermine Turkey’s national interests. As in prior months, their comments continue to wreak havoc on financial markets, undoing recent progress in damage control by other Turkish policy makers coming to the CBRT’s defense. We also remain deeply concerned about the likelihood of the disappearance of the most credible and market-friendly Turkish policy makers (e.g. Ali Babacan, Mehmet Şimşek, [central bank Governor] Erdem Başçı) over the coming months.

So how to play these mounting tensions? Société Générale has been bullish on bonds and the lira, but now suggests that traders hedge against rising political risks by “going long volatility in USD/TRY via a 3-month call option.”

“We recommend a long volatility position via a 3-month at-the-money call option on USD/TRY volatility, which currently costs 2.6198% in premium (ATMD strike of 2.5369). This position will benefit if implied volatility continues to rise, or if TRY weakens against USD over the coming months. With 3-month implied volatility currently at 12.64, we target a move higher to 14.64, combined with 3% deterioration in TRY.”

The iShares MSCI Turkey ETF (TUR) was down 1.3% in recent trading, while the Vanguard FTSE Emerging Markets ETF (VWO) is flat today. Shares of bank Turkiye Garanti Bankasi (TKGBY) are down 1.7%, while shares of telecom giant Turkcell Iletisim Hizmetleri, or Turkcell, (TKC) are down nearly 1.9%. Goldman Sachs recently upgraded Turkcell to Buy, bucking a trend of downgrades.

About Emerging Markets Daily

Emerging markets have been synonymous with growth, but the outlook for individual nations is constantly changing. Countries from Brazil and Russia to Turkey face challenges including infrastructure bottlenecks, credit issues and political shifts. Barrons.com’s Emerging Markets Daily blog analyzes news, data and research out of emerging markets beyond Asia to help readers navigate the investment landscape.

Barron’s veteran Dimitra DeFotis has been blogging about emerging market investing since traveling to India and Turkey. Based in New York, she previously wrote for Barron’s about U.S. equity investing, including cover stories and roundtables on energy themes. Dimitra was among the first digital journalists at the Chicago Tribune and started her career as a police reporter at the Daily Herald in the Chicago suburbs. Dimitra holds degrees from the University of Illinois and Columbia University, where she was a Knight-Bagehot Fellow in the business and journalism schools. She studies multiple languages and photography.